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Issue Number One
The Deaths of Princess Diana & Dodi al Fayed are Ruled Unlawful Killings; Struggles of Small Business Continue; How to Deal with the Cost of College; Not-So-Friendly Skies: Consumer Complaints Increase
Aired April 07, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: From CNN headquarters in Atlanta, I'm Tony Harris.
"ISSUE #1" begins in a moment, but first your headlines.
Air travel, a new survey of airline survey shows passengers are fuming. Consumer complaints against carriers jumped 60 percent last year. On time arrivals dropped for the fifth straight year. In fact according to the survey, more than one in every four flights is late. Also on the rise, the rates of passengers bumped from overbooked flights and the number of bags lost, stolen, or damaged.
In west Texas, authorities continue to search for a polygamist sect compound. They're looking for victims of possible physical and sexual abuse. They are also looking for evidence that a 16-year-old girl was forced into marriage. So far, more than 200 people have been removed from the ranch, most of them are children.
Angry protests in Paris cut short the Olympic torch relay. Police, some on roller-blades, provided security for the torch bearer. But intense demonstrations forced them to cancel the event a little more than half way through the route, the protest aimed at China's handling of Tibet.
After days of deliberation, a British jury has ruled that the 1997 deaths of Princess Diana and her boyfriend, Dodi al Fayed were unlawful killings. The verdict follows a lengthy coroner's inquest. Jurors blame the couple's death on the reckless actions of the driver Henri Paul who was killed in the accident and the paparazzi photographers who were chasing their speeding car.
More news at the bottom of the hour.
Now, "ISSUE #1" with Ali Velshi and Gerri Willis.
ALI VELSHI, CNN ANCHOR: President Bush talks with small business owners, so many of them are struggling. Lessons learned from the folks who brought you Obama.
And Russell Simmons live on why financial literacy can make all the difference in the world.
ISSUE #1 is the economy. ISSUE #1 starts right now.
ISSUE #1, the show where we tell you the things you want to know about the most important issue in this election, the economy, your money.
I'm Ali Velshi. Gerri Willis will be along in just a moment.
There are 20 million small businesses in the United States, that makes them a driving factor of the economy. They are the most important employer in the entire economy. Well, President Bush is scheduled to meet with small and mid-sized business owners in less than an hour to discuss the economy stimulus package.
CNN's Kathleen Koch is live at the White House with more -- Kathleen.
KATHLEEN KOCH, CNN WHITE HOUSE CORRESPONDENT: Ali, you know President Bush has been overseas for nearly a week attending a NATO summit, meeting with Russian president, so now that he's back, the White House is really very anxious to show Americans that the president is hitting the ground running addressing their primary concern right now and that, of course, is the economy.
So even before the president had left, the White House had been orchestrating a series of events where the president could tout the benefits of his economic stimulus package. One of them was a visit to a small business in Virginia.
So what the president is doing today is basically another in a series of those events. I think most Americans very familiar with those checks that they're waiting to anxiously receive in May, but the president again today is focusing on the small business tax breaks that are included in the stimulus package, some $50 billion.
The administration says it will bring to small businesses and that is in part because it will temporarily change the tax code, among other things, allowing businesses to buy new equipment in 2008 to deduct an additional 50 percent of the cost of that investment in 2008. It's also going to increase experiencing for small businesses.
Basically the White House hopes all that means that these businesses will expand, that they will hire more workers, that they will grow. So the president will be meeting with small and medium sized businesses today here at the White House. Businesses are planning on investing some of that money that they're getting from these tax breaks. He'll be hearing their stories.
But again Ali, we're hearing's not going to be announcing any new initiatives. Back to you.
VELSHI: And Kathleen whether the issue is tax breaks or stimulus checks, it's what individuals and what businesses do with them, will they spend them in a way that stimulates the economy.
Kathleen, thanks very much.
KOCH: You bet.
GERRI WILLIS, CNN ANCHOR: President Bush is talking about it, but have the candidates addressed the importance of small business is this and if you're a small business owner, what can you do to protect yourself in this rough economy?
To answer all those questions and more, Terry Neese, a distinguished fellow for the National Center of Policy Analysis, and personal finance author, Lynnette Khalfani-Cox.
Welcome to both my guests.
LYNNETTE KHALFANI-COX, AUTHOR, "INVESTING SUCCESS": Thank you for having me.
WILLIS: Good to see you. Terry, let's start with you. You are a serial entrepreneur. You're started out many businesses. You know just how tough a recession can be on small business owners. What is this decide like for people who have small businesses?
TERRY NEESE, DISTINGUISHED FELLOW NATIONAL CENTER FOR POLICY ANALYSIS: Well, it is tough. But I have to say, living in the real world in Oklahoma, my business is up about 18 percent in the first quarter. But what small business owners really need is access to affordable health insurance for themselves and for their employees.
And at the National Center for Policy and Analysis, we believe that small business owners should be able to band together against -- across state lines and an economy of scale to purchase health insurance and lower your premiums.
WILLIS: Great idea. OK.
Lynette, obviously the economy weighing on the minds of small business operators. It's just tougher to make money when the economy as a whole is suffering. Are the presidential candidates addressing this in any way? It seems to me it's not really on the radar.
KHALFANI-COX: I don't think that they are as ever certainly as a lot of small business owners would like them to. But they have taken a stab at it in different ways. Health care actually ranks among them as she just suggested, one of the biggest challenges for small business owners and entrepreneurs is paying for affordable health care for their employees, doing it in a way that they are able to still grow, expand operations, and hire new employees.
We're seeing the popularity of health savings accounts, those high deductible plans come to prominence. And I think we'll start seeing the candidates talk more about the initiatives.
WILLIS: But they haven't yet.
So let's move on to women in the workplace. I know this is a favorite topic of yours. Obviously there's still barriers out there. Michelle Obama recently talked about how women need policies specifically for them in the workplace. What do you make of that, what are women thinking about now that should be addressed by these candidates?
NEESE: All the candidates need to be talking about giving women less stress in their lives. And that means portable benefits, flexible benefits, and flexible workplaces. It's critically important that women have the flexibility with today's environment, we need all the help we can get on the job.
According to the Employment Policy Foundation, 75 percent of all workers prefer compensatory time off in lieu of overtime wages. So those are some of the things that the presidential candidates should be talking about.
WILLIS: Real pressure on families. But a quick follow, Terry. What about that glass ceiling? Women still not being paid the same as men. Are we ever going get past this is this?
NEESE: You know it is 77 cents compared to a dollar. It has risen some. But I believe that is why more and more women are leaving corporate America and other businesses and starting their own bills. And, in fact, according to the Center for Woman's Business Research, there are ten million women business owners today who are employing 13 million workers and generating $1.9 trillion in annual revenue.
WILLIS: So we're a force. Given that, how should women who are running small businesses and men as well for that matter, how should they be managing their money is this.
KHALFANI-COX: I think they should be doing a number of things. One is to conserve cash. We're in a tough environment, a recession, despite what some politicians say. We are in a recession. Managed a credit wisely. Also think about things that might be nontraditional a ways of financing your operation.
For example, can you barter services? Instead of getting a traditional bank loan, can you get a loan against receivables that you might have coming in, can you do factoring? Those type of things which would allow you to get either the money necessary or the services you might need to grow and expand your operations.
WILLIS: Terry, you also talk a little bit about being creative in this marketplace. What's your best suggestion for people out there who really struggle with this economy?
NEESE: I think small business owners must follow their business plan to the letter as closely as they can. They need to follow their budget. They need to be aggressive. They need to be consistent. They need to be persistent.
I mean, all of those things are critical. Business owners need less taxes and the ability to have less regulation and paperwork. Those are three items. And the fourth is also access to affordable health care.
WILLIS: Great topic. Absolutely great advice. Thanks to both my guests Terry and Lynnette for helping us out.
VESLHI: Not just great topic but great guests. That was excellent. Thank you.
It's your turn to weigh in on today's quick vote question. Head over to CNNmoney.com to caste your vote. Now when Poppy does this, you all respond by the tens of thousands so don't make me look back just because this is my gig today.
Today's question: How many credit card debt do you currently have? Be honest with me. More than $10,000, between one and $10,000, or less than a thousand dollars? Or none? That's a choice, too. Log on to CNNmoney.com to vote and while you're there, check out the latest financial news and tools that that site has to offer. We'll bring you the results a little later in the show.
Coming up, a bit of a surprise to the road to Pennsylvania and the primary. Plus, Barack Obama the brand, we're going to tell you a little bit about his marketing machine and how it might have some tips for you. And he's best known for hip hop and fashion, but Russell Simmons means business. His take on your money coming up.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1. A funny thing is happening in the weeks leading up to the Pennsylvania primary. Senator Hillary Clinton at one point had what seemed an insurmountable lead, but Senator Barack Obama is slowly but surely gaining ground on Senator Clinton. And there are still two weeks to go.
CNN's Dan Lothian is live in Philadelphia with the CNN Election Express.
Hi there, Dan.
DAN LOTHIAN, CNN CORRESPONDENT: Well as you know as you mentioned, she did have a big lead here in the state of Pennsylvania, a double digit lead for so long. But it has shrunk now according to the latest poll of polls.
That lead now only at seven points. Take a look at the numbers. Senator Clinton leading Senator Obama at 49 percent. Senator Obama 42 percent, undecided at nine percent. You compare that to the last poll of polls which came out last Friday and Senator Clinton had an 11 percent lead.
The big question, of course, is why. Perhaps it's too soon to get at that, but the facts are such. Senator Obama has spent a lot of money here in the state of Pennsylvania. He has a lot of money to spend as we reported last week.
He was able to raise more than $40 million in the month of March. So he has the money. He's outspent Senator Clinton three to one and has put up many, many different television ads here in the state of Pennsylvania.
He also went on a six day bus tour across the state of Pennsylvania and Obama campaign's always said as he gets on the ground, as people get to see him, the more they meet him, the more they like him.
It also doesn't hurt that he has gotten some key endorsements like one endorsement from Senator Bob Casey who has been -- has gotten the support of union members and working class voters here in the state of Pennsylvania. And that is a core group that both Senator Obama and Senator Clinton are both going after -- Gerri.
WILLIS: Dan Lothian, thank you for that.
VELSHI: There are some lessons to be learned during a presidential campaign, not just lessons to how to win the election obviously, but how it run a business possibly. Ellen McGirt is an old friend of ours and she has a great story on the cover called a Brand Called Obama. It's about Obama, the brand.
In the article, one analyst says Obama is a brand dream come true. He's new, he's different, and he's attractive. But he's also had to overcome the you're too young, you don't have enough experience, those kind of issues. Brands are all about trust.
ELLEN MCGIRT, FAST COMPANY MAGAZINE: They really are. And it's hard to imagine now that there was a time when he didn't have any money and he had fewer resources and not a lot of friends. Not a lot of people knew who he was.
So he did something that was very smart, he trusted members of his campaign who were very good at certain social networking and mod earn Internet tools and used that to get the message out. Because familiarity breeds trust and he was able to do that very early on in the race.
Iowa was a big victory both symbolically and actually. He was able to use that to telegraph his popularity to the next race, the next race, the next race position and it turned into, click, it turned into cash, it turned into votes, which is a lot of things that other businesses have not been able to do so.
VELSHI: But as Dan just said, as he slows down possibly in momentum in part the votes he's not getting, in many cases they've been white men who aren't necessarily on social networking sites. So where Barack Obama has brought in this enthusiastic group of youth, is that structure, is that branding going to translate into a more mainstream group of voters?
MCGIRT: The other thing they've been good at is training the boots on the ground in getting the message out. They're uniquely good at getting out there and knocking on doors. They've got their talking points, but they've also been in power to develop their own talking point. There's nothing like your neighbor knocking on your door.
VELSHI: You interviewed a professor from Harvard who says Obama conveys he loves people. And Hillary Clinton conveys she loves policy. And we're in a difficult world where there are some days I'm more interested in loving policy. But they both sort of have to figure that out. Don't they?
MCGIRT: That's right. And he was also quick to say in our chat that both love people and both love policy. And if you want to go to any of books, 700 pages of biography, also on the Web site. Clinton loves people, too, about you in terms of communicating the message, that's where they've been emphasizing.
VELSHI: ISSUE #1 is a show about money and how it affects people because the issues are intertwined. This is a business strategy when you have examined Barack Obama's campaign strategy, it's a business strategy.
MCGIRT: It really is. And a candidate is the perfect match-up between an individual who is looking for a job and a big brand. So we can all learn something from what the campaign has been able to do.
VELSHI: What would you say is the thing that breaks away the most from -- in your research from a typical campaign of this style?
MCGIRT: Communication, not advertising. A traditional command and control campaign is going to use modern tools to telegraph the message. It takes some guts because you have to give up control of your brand message.
VELSHI: And what's the danger? What happens? Too many people are speaking for Barack Obama?
MCGIRT: That's right. They take it, they run with it, and through their creativity, their enthusiasm and their love for the subject, they turn it into sort of a parity of itself. I've got a crush on Obama is unfortunately a very between example of that but he overcame that. Everybody's making videos for this guy and they're enjoying it and actually distributing on their Web sites themselves.
VELSHI: Good to see you. One of these days on TV we'll have to talk about the fact that we both have done cross-country road trips.
MCGIRT: I know. And I keep track of you on CNN and on Facebook.
VELSHI: There you go. Ellen McGirt of Fast Company Magazine -- Gerri.
WILLIS: NAFTA is the North American Free Trade Agreement which allows almost all products to be bought and south sold across the United States, Mexico and Canada without taxes or tar arrives. All three presidential candidates have different views on its future.
CNN senior political analyst Bill Schneider is part of the best political team in television. He is he live in Los Angeles with more.
Hi there, Bill.
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Good morning, Gerri.
WILLIS: Bill, can you tell us a little bit about NAFTA and how are the candidates lining up on this topic?
SCHNEIDER: Well, Hillary Clinton and Barack Obama have generally been far more critical of NAFTA. They're not ready to say they haven't said they'll just throw it out and do away with it, but they've said that they will would be willing to renegotiate it because they think it's unfair to American workers.
John McCain has certainly said he'd support NAFTA because he thinks there should be more aid for workers in Pennsylvania, Ohio and other states, particularly manufacturing workers who have lost their jobs because of competition and outsourcing, which have been encouraged most Americans believe by these trade deals like NAFTA.
WILLIS: And do you see any flip-flopping on this topic at all?
SCHNEIDER: I wouldn't say it's flip-flopping although Hillary Clinton has been accused of having assumed NAFTA when her husband obviously signed it and was strongly in favor of it. She claims that privately she was very critical of it with her husband. But publicly she did support NAFTA. So the Obama campaign has accused her of flip- flopping.
What we've seen interesting developments most recently this weekend. Mark Penn, the chief strategist for the Clinton campaign, met with a representative of the Colombian government to help them as a client promote a free trade deal with Colombia which the Bush administration assumes.
But he is the chief strategist for the Clinton campaign or he was until yesterday. And she has condemned that deal and said it would not be good because the government of Colombia has been so hostile to trade unions in their country.
We saw an earlier incident where an economist who worked for the Obama campaign met with a representative of the Canadian government and is reported to have reassured them that all of the tough talk about renegotiating NAFTA was just campaign talk and wouldn't happen if Obama became president. So there's a lot of behind the scenes efforts that have created a storm of controversy about both of these candidates.
WILLIS: Interesting developments. I'm sure you'll continue to follow them for us.
Bill Schneider, thank you for that.
VELSHI: Big hip hop fans. Stick around. We are talking business with hip hop and fashion mogul Russell Simmons. Plus answers to your questions. Send us your e-mails. We'll answer them.
You're watching ISSUE #1 on CNN.
(COMMERCIAL BREAK)
WILLIS: As Pennsylvania gears up for its primary, many of the economic issues facing the state are being put in them to the light. Today Democratic Senators Chris Dodd and Bob Casey held a meeting in Philadelphia on the rise in foreclosures and predatory lending there.
CNN's Jim Acosta is live in Philadelphia with more. Jim?
JIM ACOSTA, CNN CORRESPONDENT: Hi, Gerri. The nation's foreclosures crisis was put under the microscope here in Philadelphia with the chairman of the Senate Banking Committee and Senator Bob Casey and the mayor of Philadelphia all talking about the mortgage crisis facing the city of brotherly love, both Dodd and Casey and along with Michael Nutter, they all discussed ways to handle the mortgage crisis.
Dodd is pushing a bill in the Senate that would provide affordable mortgages to distressed homeowners through the Federal Housing Administration. Dodd says that bill would offer assistance to owners who occupy their homes and not to speculators.
Both he and Senator Casey are trying to make the case that homeowners are facing the situation that they're in the hard times that they're in, not because they bit off more than they could chew but because many homeowners were taken advantage of by unscrupulous lenders.
(BEGIN VIDEO CLIP)
SEN. ROBERT CASEY (D), PENNSYLVANIA: We're talking about the ultimate betrayal, the ultimate betrayal of families by people with power and money and influence. Instead of entering into a transaction that that family can afford, too often unregulated, unscrupulous unscrew players in the market have led families down a path of ruin financially.
SEN. CHRIS DODD (D), CONNECTICUT: If we could put up as much as $30 billion in your money in this kind of a deal, weren't can he get the same kind of commitment when it comes to 8,000 people every day losing their homes?
(END VIDEO CLIP)
ACOSTA: And that was Chairman Chris Dodd there talking about the $30 billion bailout for Bear Stearns. He was also mentioning that 7,000 to 8,000 homeowners nationally are losing their homes and going into foreclosure every day. One of the speakers at this hearing we should also mention was an actual homeowner is in the middle of having her home foreclosed on.
And she claims as the senators were claiming that she was misled about the terms of her loan and says she is not alone and one thing that you may have mentioned about this field hearing in Philadelphia today is that there were no Republican members of the Senate Banking Committee. That's an indication there that Dodd and Casey may have some work to do when it comes to advancing this bill in the Senate -- Gerri.
WILLIS: Well Jim, just how big is the foreclosure problem in Philadelphia?
ACOSTA: It's a big problem, 6200 foreclosures in Philadelphia alone just last year. That was an 18 percent increase over the year before. And the mayor here was talking about the problem that they're facing is very similar to what you're seeing in Cleveland where you have neighborhoods with vast swaths of foreclosures happening across entire neighborhoods, sheriffs coming up putting notices on people's doors that their homes are being foreclosed on, homes being torn down, blighted properties, everything that we've heard about the foreclosure crisis how it's happen affecting other cities is happening here, as well.
WILLIS: Jim, sad story. Thank you for that, Jim Acosta.
VELSHI: All right. Coming up next, the importance of financial literacy. We'll talk with Russell Simmons live and we'll be answering your questions so many of you have out there, how to pay for college. Those topics coming up on ISSUE #1.
(COMMERCIAL BREAK)
DON LEMON, CNN ANCHOR: Hello, everyone. I'm Don Lemon, live at the CNN World Headquarters in Atlanta.
We're going to have more of ISSUE #1 in just a moment. But first we want to check on some headlines.
After days of deliberation, a British jury has ruled that the 1997 deaths of Princess Diana and her boyfriend, Dodi Fayed, were unlawful killings. The verdict follows a lengthy coroner's inquest. Jurors blame the couples deaths on the reckless actions of driver Henri Paul, who was killed in the accident, and the paparazzi photographers who were chasing their speeding car.
We have a new survey to tell you about. It's about airline quality and it shows passengers are fuming. Consumer complaints against carriers jumped 60 percent last year. On-time arrivals drop for the fifth straight year. In fact, according to the survey, more than one in every four flights is late. Also on the rise, the rates of passengers bumped from over-booked flights and the number of bags lost, stolen or damaged.
President Bush is pushing a free trade agreement with Columbia and he's trying to force Congress to back it. He signed a letter today giving lawmakers 90 days to vote on the plan. Many leading Democrats, including House Speaker Nancy Pelosi, they oppose the agreement. They want provisions added to protect U.S. workers.
How's the U.S. troop surge strategy working in Iraq? General David Petraeus and U.S. Ambassador Ryan Crocker are expected to testify before Congress tomorrow. It's their first joint testimony before lawmakers since last year. Military experts say, don't look for the top U.S. commander in Iraq to commit to a time table for troop withdrawals before the summer.
More news at the top of the hour right here in the "CNN NEWSROOM." I'm Don Lemon.
Now, more ISSUE #1 with Ali Velshi and Gerri Willis.
VELSHI: Welcome back to ISSUE #1, where we focus on the issues that a lot of you say is the most important to you. And they all have to do with the economy.
WILLIS: Financial literacy is an issue of great importance. There's a school of thought out there that says if more Americans were educated about how they handle their money, there would be a lot less debt.
VELSHI: Maybe we wouldn't be in this mess. We're joined now by hip-hop and fashion mogul Russell Simmons, who is the author of "Do You!: 12 Laws to Access the Power in You to Achieve Happiness and Success." And the list of things that Russell Simons has done is very, very long and involved, but in particular we are interested in talking to you about an initiative that you've had for a few years that goes out and teaches people about financial literacy.
Tell me about this.
RUSSELL SIMMONS, CHAIRMAN, UNIRUSH FINANCIAL SERVICES: Well, if you look at the facts that the poor may more lots of times because they don't have information. And the truth is, we don't teach financial literacy in schools. And so the hip-hop community has gotten together.
We've done 74 summits. Snoop Dogg did three in L.A., Nelly did four in Detroit -- no, Nelly did four in St. Louis; Eminem did four in Detroit.
I mean all the artists have helped us all over the country. And people like Suze Orman have come and helped us, you know, to teach the subject of financial literacy. And you find people don't know what a debit -- they don't know what a FICO score is, for instance. There's so little that's being taught and there's so many traps. And so we try to help people avoid the traps.
WILLIS: Now you've got your own version of the debit card. Tell us a little bit about that.
SIMMONS: Yes, I said debit because you -- no, I have a financial service company and it's for under-served communities. And the first product is a non-bank account required debit card. And the reason is, we have 60 million Americans who don't have bank accounts.
WILLIS: And that's a tragedy.
SIMMONS: That's a -- well, those people are locked out because then they -- how do they pay their bills? You get online for eight to 12 hours a week or how do they cash their check. They get online and pay a huge fee, as much as 12 percent, 15 percent, depending on where they live. And then they can't rent a hotel room, a car, anything.
So anybody can get a Rush Card, but it's kind of a -- it's one step in empowerment. The idea for the company is to, you know, help to fix a lot of these problems, and including how we can better loan them money. Well, their payday loans are so high.
VELSHI: Yes.
WILLIS: They're terrible.
SIMMONS: But when we have a Rush Card, we start -- we understand them better. And so that's the process that you find.
VELSHI: The Rush Card has got a -- it's a Visa symbol. It's a debit card.
SIMMONS: It's a black Visa card. It has -- you know, it gives you dignity, but it gives you access, where before that you might have been locked out and so that's its purpose.
VELSHI: You know you've been -- Russell's been doing this for years. So you're not new to this. This isn't part of this whole economic downturn that we're in right now.
SIMMONS: No.
VELSHI: You've been looking at this for a long time. And having looked at it, your view is that financial literacy should be mandatory in high schools.
SIMMONS: Of course it should. It should be part of the curriculum. To take that out of the curriculum and you leave people who maybe have a family history of not being financially literate, how do the kids learn? How do you get out of a struggle if you don't have, you know, the tools to get you out? So this education is critical.
WILLIS: Well, where do people get their messages? Is it the media? I mean you see, you know, big houses, big watches, big cars advertised all the time.
SIMMONS: When do you discuss, how do you get out of, you know, bad debt or bad credit? I mean, how do you start to build your FICO score. There's a process, you know. It doesn't mean cut up your credit card and throw them away. That could hurt, of course, right? So, you know, there are smart ways to get out of debt and smart ways to get yourself -- your credit score up.
And it matters. It matters. You whole life can be destroyed by just some kid with a college -- a credit card in college. Make their whole life a --
WILLIS: It happens all the time.
SIMMONS: That's right.
VELSHI: As Gerri says, though, they see in media images of big houses and big cars and big blink and, guess what, of the three of us at the table, that would be mostly you. How do you bring that to the table? How do you -- what's your message about -- because you're not in financial difficulty.
You're a businessman. You're successful. You're an artist. What's your connection to it? How do you connect to these people who don't understand money? SIMMONS: Well, all the artists come out and teach the subject. I mean, we give out these booklets and we have maybe as many as 8,000 kids come out. They get this booklet, which is financed and supported by Chrysler Financial. These big booklets, but simple to understand rules. And they can -- pen and paper, the artists teach. Suze Orman or some of the experts teach and they take notes. So that's my role.
And I think that -- you know, I don't -- I can't blame the hip- hop community because they have cars. I don't know if other entrepreneurs have cars and stuff, but, you know, I'm assuming they do. I'm assuming that Tommy Hilfiger has a bunch of Rolls-Royces or Ralph Lauren or, you know, if I'm -- Paris Hilton's got a new car. I mean, I don't think -- so to blame the artists for the struggling in the communities --
VELSHI: No, no, I'm saying you're using the draw of having the artists there so people can come in and learn about them.
SIMMONS: Yes, the artists speak well to them, yes. Right now we're also doing, on April 20, that's the day the hip-hop summit's going to hold one of their summits on voting. And you're going to see how they'll make a tremendous difference in Pennsylvania. So the hip- hop community has always been a great giving community.
WILLIS: If it's not the hip-hop community, though, who has dropped the ball, because we're not teaching it in schools . . .
SIMMONS: They certainly haven't dropped the ball, but they're picking it up.
WILLIS: Right.
SIMMONS: The schools -- we have dropped the ball. Education and opportunity is something we've almost forgotten about. I mean, we have -- I don't want to get into a political discussion, but, you know, the lack of interest in educating our kids. You know, the amount of money and the amount of resource we put into the kids versus the war or, you know, the kind of corporate welfare or the welfare of the people.
These are subjects that have to do with this upcoming election. I think young people are paying attention to that now. So I'm excited about that.
WILLIS: Absolutely. They are paying attention. And we're paying attention to you. Russell Simmons, thank you so many.
VELSHI: If I write a hip-hop song about financial literacy, will you produce it for me? Come on.
SIMMONS: I can't make a commitment.
VELSHI: All right. Russell Simmons, thank you.
Coming up, how to pay for your child's college education. We'll break it down for you. WILLIS: Then it's your turn to ask questions. Send us an e-mail to issue1@cnn.com. We're answering your e-mails next.
(COMMERCIAL BREAK)
VELSHI: Checking the headlines.
With critics saying the economy is on the skids, President Bush is playing host to business leaders next hour. Small business leaders. His aim is to play up the tax breaks and investment incentives that are part of the economic stimulus package.
Yahoo! says it can be bought, but it won't come cheap. It's asking Microsoft to sweeten its $41 billion takeover proposal. Now Microsoft is threatening a proxy fight if the Internet icon doesn't accept its deal within three weeks.
And if you've filled up your tank in the past couple of weeks, you know the pain at the pump is accelerating. Gas prices are hitting a new record high. Right now the average price of a gallon of self- serve regular, $3.34 a gallon.
WILLIS: Hey, a big worry for parents these days is, how am I possibly going to pay for my child's college. The cost for a four year college education rising and rising quickly. Katherine Cohen is the author of "The Truth About Getting In," and she is CEO of the online counseling web site called applywise.com.
Katherine, welcome. Good to see you.
KATHERINE COHEN, AUTHOR, "THE TRUTH ABOUT GETTING IN": Thanks for having me.
WILLIS: So this is the week that high school seniors are going to be getting those letters. You know, you're in, you're not in. And for parents, the good news for the senior may be bad news for mom and dad. What do you tell folks who are struggling, struggling to pay those big dollars?
COHEN: Well, first of all, I tell them, don't make a panic decision based on sticker price alone. It's really important it find the best college fit for you because this is an investment that pays off for the rest of your life. So the first place they should go is to the financial aid officers at the colleges where they have been admitted and explain their situation, especially if it's changed since they applied.
WILLIS: You know, some people have lost their jobs. Some people are being forced to downsize.
COHEN: Exactly and they want to see if they can get a better financial aid package or perhaps a work study opportunity.
WILLIS: So go to the college and make your best request.
COHEN: Right. WILLIS: You know the real problem, though, is that it's not just tuition. And tuition at a private school, it's up 6 percent this year. I can't believe the numbers, over $23,000. What other kind of costs are you going to encounter? If this is your first year, you have a college freshman this year, how much more are you going to be paying? How do you afford it?
COHEN: Well, on average, a family should expect to pay between $95 and $1,400 more for tuition and fees this year. So it's gone up about, as you said, a little more then 6 percent. But what a lot of families don't think about when they're planning their college costs is actually the costs to apply to college.
WILLIS: Absolutely true.
COHEN: At applywise.com, we found that we actually have a college application budget calculator. And we found that students spend, on average, $3.500 just applying to college.
WILLIS: You know, I think parents, you know, you go visit the school, you travel, you get hotel rooms, there's all this extra cost in there. What other kind of tips do you have for people out there who are looking for extra help? Are there places to go for scholarships? For extra money?
COHEN: Well, there's a lot of things they can think about. First of all, if they can't afford to go to college this year, they could think about deferring their enrollment for a year, getting a job, staying at home, saving up their money and then applying that to the cost of their education.
WILLIS: That's a great idea. Let's talk about that for a second because what we have here a lot of people losing their jobs. You're saying you can actually defer your admission, maybe save up some more. You know, mom and dad, get re-employed. And then go back into the college environment.
COHEN: Exactly. Or you could try to graduate in three years, which costs -- cuts the cost of college tremendously. If you have taken AP courses in high school, you can see if those credits transfer or go to a less expensive institution over the summer, make sure those credits will transfer over and try to graduate sooner.
WILLIS: That's a great idea. What about, you know, I know some people try to kind of, at the margin, try to save money like with meal plans. You know, if you know Johnny's never getting up for breakfast, maybe getting breakfast does not make sense.
COHEN: Exactly. And you might even want to look at room and board versus renting an apartment with your friends off campus. Sometimes that's less expensive. Also think about buying used books instead of new books. And for those families who are thinking about the college application process now, they should start to budget early.
They have to think about the costs for standardized tests. S.A.T., Aps, they all cost money. The costs for visiting colleges. The cost for those online or, you know, S.A.T. prep classes. And, finally, the application fees themselves. A lot of families don't think about it, but those can reach --
WILLIS: How much?
COHEN: Anywhere from $35 to $75.
WILLIS: It adds up when you're applying all over the country.
COHEN: Right. And because it's so hard to get into colleges these days, it's not unusual for a student to apply to 10 colleges.
WILLIS: Wow. OK. Well, there's one thing I want to add. Finaid.org if you're looking for a great place to get some information online as well.
COHEN: Yes.
WILLIS: Katherine, thanks so much for being with us today.
COHEN: Thanks for having me.
VELSHI: Boy am I glad I'm done paying for college.
Coming up next, answers to your questions. The help desk is standing by sitting by right behind me with real solutions to your money questions. So keep those e-mails coming. The address, issue1@cnn.com. And the show is ISSUE #1. We are coming right back.
(COMMERCIAL BREAK)
WILLIS: All right. It's that time in the show where you get your questions answered. Let's get started with the help desk right away. Mike Santoli is with Barron's. Lynnette Khalfani-Cox is the author of "Your First Home," and senior correspondent Allan Chernoff is with us as well today.
Welcome to you all. Great to see you.
Let's get right to it.
The first e-mail is from Sharon. She asks: "What's the job outlook for new college graduates? I am graduating in May with an Industrial Engineering degree and I am finding it almost impossible to find an entry-level job."
Lynnette, what do you think, the outlook for new graduates? I would think that's a golden degree.
KHALFANI-COX: Well, it's a tough outlook in general. Obviously unemployment is up 5.1 percent according to the most recent stats. But engineering majors actually are among the top paid recent college graduates. Mechanical engineering, et cetera. So at least she's in the right line of work there.
WILLIS: Yes, well she should get something.
KHALFANI-COX: $50,000 plus in terms of starting salaries on average.
WILLIS: Got to be willing to move. That's another thing that will help you out in this marketplace.
Let's go it the next e-mail. Gus in Florida asks, "how would you rate the opportunity for growth and success that the entrepreneur has in this stumbling economy?"
OK, Mike. You know, if you're starting a new business out there, it's a little dicey you've got to say, right?
MIKE SANTOLI, BARRON'S ONLINE: Yes. Well, there's definitely headwinds. Obviously banks are not really eager to lend to new enterprises. That's something, if you need financing, it's not going to be great. It also is true that, just in general, we have a softening demand situation here from many parts of the economy.
It depends on the business. But easier to hire people. That's one of the challenges a lot of times for a small business. And, you know, really, in downturns is when small businesses end up being the ones that take the baton for the next phase of growth once the economy start to re-expand.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: And typically recessions don't last all that long. A lot of recessions only last for six months.
WILLIS: I hope you're right this time, Allan.
Let move on to the next e-mail.
Carrie in Minnesota asks: "I would love to know how many American families are helped by all the 'new programs' designed to prevent or reduce the foreclosure rate. I can't share a single success story about a home/family saved by the grace of their lender."
You know, Allan, we hear this all the time that people are feeling like the programs really aren't helping people. They call their lender. They don't get a response. How many folks are being helped?
CHERNOFF: Well, according to Hope Now, which is that organization, private partnership with the government, more than a million people were helped, if you can believe it, from that's what they're saying. Those are the numbers they're saying.
WILLIS: There's a few people out there asking question that. Right.
CHERNOFF: That's according to Hope Now. That's what they're saying.
KHALFANI-COX: Right. No -- we -- and he's right on the money with the numbers that they're saying. But, you know, the fact is that a lot of these families that have been helped didn't get forbearances or deferments. You know, maybe they got extensions of repayment plan. They didn't get their loans modified in ways that's going to help them in long term. Some people say, are they really helped or are we just prolonging some of the pain.
WILLIS: That's a problem with some of that.
KHALFANI-COX: But that million -- that million --
CHERNOFF: Of that million, they say about one quarter of a million had loan modifications, three quarters of a million repayment plans.
WILLIS: Right. You know, the devil's in the details here. You know, the most help you can get, getting a new loan is the best way to go.
Let's go on to the next e-mail. This is from California: "I just finished medical school and have over $200,000 in federal and private loans at rates from 4.5 percent to 8.5 percent. How do I find the best deal to consolidate them, and how can I find out when my variable rate loans will reset to a lower rate?"
Why don't you just weigh in here, Lynnette. You pay a lot of attention to these loans.
KHALFANI-COX: Sure. And one of the things I wrote about in "Zero Debt for College Grads" is how to effectively manage private loan debt and federal student loan debt. You can get on the education web site for the Department of Education to find out about your federal student loans. There's a page that they let you go to.
You can track your interest rates, what's due when, that kind of thing. With your private lenders, you'll have to essentially dig up your promissory notes or call up the lender directly, find out when that's due to reset. If you want to, you know, consolidate, finaid.org is a good place to go. The Department of Education also has a web site consolidation information on there as well.
WILLIS: All right. You know, Mike, I just want to bring up something, though, that I think is interesting about this viewer who's writing in. $200,000 in debt. I find a lot of times that college students don't weigh their ability to repay when they're choosing a vocation.
SANTOLI: Sure.
WILLIS: How should people handle that?
SANTOLI: Well, I have to say, if you're going for medical school, I think it's pretty much acknowledged that you generally are taking on a ton of debt with the hope that it's going to be worth it down the road one way or another.
WILLIS: But it's not just them. SANTOLI: It's not. No. It's absolutely not. Especially right now, I think the cost -- the demands for college and for those top degrees is so out of whack really with the likely financial rewards that I do think we have to have some reconciliation of the two.
WILLIS: It can be tough.
Let's just grab one more e-mail here. Jennifer in New York asks: "I just found out that I will lose my job sometime between now and August. My company has offered a 'bonus' for staying until the last day. Should I stay and take the bonus or look for work elsewhere?"
I want several of you to weigh in?
CHERNOFF: She should do both, I think.
SANTOLI: Exactly.
WILLIS: Yes. Tell me. Tell me.
CHERNOFF: Look for a job and then say, hey, I'm staying. And if you don't find a job, you've got that bonus at least.
SANTOLI: And I guess the question is, do you know the amount of the bonus you're going to get, that way you can make a direct decision. You know, is my new opportunity worth it or should I stick around to get that check.
KHALFANI-COX: Exactly.
WILLIS: Great answers to everybody here. Thank you so much for playing today.
Michael, Lynnette and Allan, thank you so much.
VELSHI: All right. I don't know if this happens to the rest of you, but flight attendants are always telling me to turn my phone off because it's some kind of safety problem. Guess what, it's not.
And coming up, why some of you don't think you're getting what you pay for when it comes to air travel.
Plus, how much debt do you carry? We've got that "Quick Vote" coming in. You've still got a few minutes to get your vote in. Make me look good. ISSUE #1 is coming right back.
(COMMERCIAL BREAK)
WILLIS: Time now for the results of today's "Quick Vote."
We asked: How many credit card debt do you currently have? More than 16,000 of you who logged on to CNNMoney.com and cast your vote.
VELSHI: Thank you.
WILLIS: Here is the verdict. The majority, 45 percent of you, claim to have no credit card debt at all. Congratulations on that.
VELSHI: Come on.
WILLIS: You don't believe them?
VELSHI: I don't know.
WILLIS: Yes, I think pretty much, you know.
VELSHI: Twenty-three percent say they've got between $1,000 and $10,000.
WILLIS: Eighteen percent have more than $10,000 in credit card debt. Time to work that, right?
VELSHI: Furiously (ph).
OK. Best news story of the day, possibly the week, maybe the month, maybe even the year. I'm going to move to Europe. In Europe they are allowing you to use your cell phone on planes.
WILLIS: This is not good news. This is bad news.
VELSHI: What are you talking about? I'm never going to -- I can get stuff done.
WILLIS: Oh, I hate that. Oh, no.
VELSHI: You'll be sitting next to me on the plane and I'll be just making phone calls.
WILLIS: Oh, terrible.
VELSHI: It's going to be like smoke and non-smoking, though.
WILLIS: Pardon me, sir, can you turn that off? I really don't want to listen to that.
VELSHI: That's what it's going to be like. Yes, I think we're going to have to go back to like separate seating. But, yes, I mean, hopefully it shows up in American and we can get some work done on the phone.
The airline industry is having a rough year, and because of that, are you paying more for your air travel. But all that extra cash that you spend to fly wherever you're going doesn't actually seem to be helping anybody ease their frustrations.
Alina Cho has the story.
(BEGIN VIDEOTAPE)
ALINA CHO, CNN CORRESPONDENT (voice-over): Talk about going up, up and away. Jet fuel prices are sky high and climbing. A tough combination, especially for low cost airlines.
GENEVIEVE BROWN, SR. EDITOR, TRAVELOCITY: Those low fairs are just simply not enough to cover the high cost of fuel.
CHO: Three airlines folded under the pressure in recent weeks. ATA, Aloha and Skybus all closed up shop leaving passengers holding their bags and looking for a way home.
UNIDENTIFIED MALE: We decided to rent a car. That was our cheapest way to get back.
CHO: Bigger carriers are also feeling the pain. American, the nation's biggest, has stopped hiring. Delta is looking to cut 2,000 jobs. Continental has hinted it could follow suit. Northwest and United say they'll fly fewer planes.
And then there are the extra fees. Checking more than one bag? Be ready to pay up. An extra $50 on most airlines. Want to talk to a real person on the phone? Or bring Fido along on your flight. You've got it, pay up.
BROWN: Airlines have to become more creative about how they make money. We're now paying for things that once were included in the cost of an airline ticket.
CHO: We're paying another price, too. Customer complaints shot up 60 percent last year according to new numbers from the airline quality survey. There were more delays with one out of every four flights showing up late. Airlines trying to fill flights to capacity meant more people got bumped even though they had tickets. And luggage? Good luck finding it. The number of bags lost, also up for the year.
Alina Cho, CNN, New York.
(END VIDEOTAPE)
WILLIS: And, don't forget, for more ideas, strategies and tips to save you money and protect your house, watch "Open House" Saturday at 9:30 a.m. Eastern right here on CNN.
VELSHI: And for more of how the news of the week affects your wallet, tune in to "Your Money" Saturdays at 1:00 p.m. Eastern and Sundays at 3:00 right here on CNN.
WILLIS: Across America, the economy is issue number one. We're here every day same time, same place, noon Eastern, right here on CNN with more ISSUE #1.
VELSHI: Let's take it over to Don Lemon and Brianna Keilar. CNN "Newsroom" starts right now.
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